KPMG UK and Grenfell tower inquiry mutually agree to terminate contract after a public backlash over conflicts of interest

KPMG UK and the Grenfell tower inquiry have mutually agreed to terminate the firm’s project management advisory contract following a public backlash regarding £5.5m (US $7.4m) earnings from the bodies under investigation.

KPMG earned £1m from audit services to Celotex-owner Saint-Gobain Construction Products UK, the producer of the flammable cladding that was reportedly responsible for the spreading of the fire, as well as £3.5m in services to the principal contractor for the refurbishment, Rydon Group. In addition, KPMG also provided auditing services to the Royal Borough of Kensington and Chelsea (RBKC) which has been heavily criticised for ignoring residents’ concerns before and after the fire. `

An open letter signed by 71 academics, writers and campaigning organisations, as well as two Labour MPs, Clive Lewis and Emma Dent-Coad was sent to prime minister Theresa May on Sunday 7 January. It called for the reversal of the appointment and raised “serious questions about the professionalism of KPMG and its ability to define and serve the public interest”.

The Grenfell Tower inquiry said in a statement: "Following concerns expressed by some core participants, the inquiry team has discussed the contract with KPMG which has agreed that its work should now cease.”

KPMG announced yesterday that it had mutually agreed to quit the role but that there was no conflict of interest and insisting that only planning and management support would have been provided in this early phase without any investigative or decision making processes. It was also pointed out that strict confidentiality clauses had been included the contract. KPMG waived its fees and recognised the risks their role could have had on the public confidence of the inquiry.

Prem Sikka, professor of accounting and finance at University of Essex, said to the London Evening Standard: “Everyone can see that at the very outset there was a potential conflict of interests. In order to secure public confidence, it is now vital that the correspondence and minutes relating to the KPMG appointment should be made publicly available.”

The firm was appointed in August 2017 by the government for a £200,000 three month contract, without public tender, although the appointment was only made public in December. The inquiry admitted it was unaware about KPMG being employed by Celotex, but had known of the connection to RKBC and Rydon Group.

“Open contracting is an important anti-corruption tool that allows effective oversight to root out the awarding of contracts to benefit private interests,” a statement by Transparency International UK read. “Such a process may have also helped reveal and mitigate against potential conflicts of interest, with KPMG’s other clients including companies that are subjects of the Grenfell Inquiry.”

A key aspect of the inquiry into the Grenfell fire tragedy must include whether corruption or corrupt practices had any part to play, Transparency International UK director of policy Duncan Hames said. “It is absolutely imperative that the inquiry itself is conducted in the most transparent way possible and with the highest level of integrity. It is therefore worrying that the Government has failed to honour these principles, taking shortcuts when hiring advisers to assist the inquiry. The scale of this contract is enough that it should automatically require a competitive tender process.”

The Grenfell Tower fire broke out in the early morning of 14 June 2017 and caused 71 deaths.

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